Barge Tax Faces House Vote

OMAHA (DTN) -- After years of lobbying Congress, inland waterway operators could see their excise tax on fuel go up from 20 cents a gallon to 29 cents a gallon under a tax bill before the House of Representatives.

The barge industry has largely championed the tax increase because all the money would go to the Inland Waterways Trust Fund to help pay for repair and upkeep of river locks and dams. The industry has argued for decades that water-infrastructure remains underfunded and some locks and dams are falling into disrepair. The tax provision is projected to increase revenue for the trust fund by $260 million over 10 years.

The provision is one of two tax bills the House Rules Committee voted quickly to advance Tuesday afternoon. The Rules Committee sent the bills to House leaders for floor debate later this week. The main bill being discussed would extend dozens of tax breaks for businesses, including some key equipment-expensing provisions such as bonus depreciation and an expanded Section 179 deduction.

The inland waterways fuel tax is in H.R. 647, a bill called the "Achieving a Better Life Experience" (ABLE) Act. The bill is largely to create charitable savings contributions for people with disabilities. The ABLE Act also includes some offsetting and unrelated tax provisions. The increase for inland-waterways fuel tax is in that bill.

Debra Colbert, senior vice president of the Waterways Council, said leadership for the group is hopeful about the prospects that the excise increase gets approved in the lame-duck session. The Waterways Council represents barge operators along the countries major rivers.

"We've been pushing for a long time for this," Colbert said. "We were hoping something would come up like the tax extenders or the ABLE Act that would allow this to become part of that. Anything can happen. It's politics, but we feel pretty good about it."

It appears the Senate is mainly waiting on the House to move on tax bills, ideally by the end of this week. The Senate would then act. Colbert said she thinks key senators would help push for the Inland Waterways provision.

Commodity groups have been major advocates for boosting funds going to river infrastructure. Farmers and companies that own grain elevators rely heavily on barges to move grain down river and bring inputs up river. Mike Steenhoek, executive director of the Soybean Transportation Coalition, noted the barge industry is almost unique in the willingness to encourage a tax increase to support infrastructure.

"It wouldn't generate all the money that is needed but it would generate more money for locks and dams, which is necessary," Steenhoek said.

The accompanying tax-extender bill is H.R. 5771, the Tax Increase Prevention Act of 2014. The bill would retroactively reauthorize the tax breaks for 2014, but House tax writers declined to extend the provisions for 2015.

One provision would extend 50% bonus depreciation for business equipment and machinery bought and put into operation in 2014. For one year, the Joint Committee on Taxation estimates bonus depreciation saves businesses about $1.49 billion in taxes.

Coupled with bonus depreciation is the Section 179 deduction. Congress let it drop for 2014 to $25,000, but the bill would kick that deduction back up to $500,000 for businesses spending $2 million or less in total equipment or machinery purchases. This is a popular provision for farmers and farm-machinery manufacturers. The provision is projected to save businesses about $1.43 billion in taxes. House Ways and Means Committee Chairman Dave Camp, R-Mich., told the Rules Committee that the Section 179 provision is the most popular provision in the package.

"I think that is probably the provision members have asked me about the most," Camp said.

Renewable Energy Provisions

The tax-extender bill also would extend the $1 per gallon tax credit for biodiesel and the 10-cent a gallon small agri-biodiesel tax credit. The bill also extends the cellulosic fuels tax credit for 2014 as well. The biofuel provisions are projected to save the industry about $1.3 billion in federal taxes.

Despite significant resistance from conservative groups such as Americans for Prosperity, the House bill also would extend the wind Production Tax Credit for 2014 power generation as well. It becomes one of costlier provisions in the tax-extenders bill because of the growth in wind energy in recent years. A one-year extension would save the industry nearly $9.6 billion.

The total tax-extenders package is projected to reduce federal taxes about $47.4 billion.

Chris Clayton can be reached at chris.clayton @dtn.com.

Follow him on Twitter @ChrisClaytonDTN.

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